Correlation Between Siam Cement and EDP -

Can any of the company-specific risk be diversified away by investing in both Siam Cement and EDP - at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Siam Cement and EDP - into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Siam Cement and EDP Energias, you can compare the effects of market volatilities on Siam Cement and EDP - and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Siam Cement with a short position of EDP -. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siam Cement and EDP -.

Diversification Opportunities for Siam Cement and EDP -

0.16

Correlation Coefficient

Siam Cement  EDP -

Average diversification

The 3 months correlation between Siam and EDP is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Siam Cement and EDP Energias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDP Energias and Siam Cement is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Siam Cement are associated (or correlated) with EDP -. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDP Energias has no effect on the direction of Siam Cement i.e., Siam Cement and EDP - go up and down completely randomly.

Pair Corralation between Siam Cement and EDP -

Assuming the 90 days horizon The Siam Cement is expected to under-perform the EDP -. But the pink sheet apears to be less risky and, when comparing its historical volatility, The Siam Cement is 7.72 times less risky than EDP -. The pink sheet trades about -0.14 of its potential returns per unit of risk. The EDP Energias is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  326.00  in EDP Energias on December 27, 2024 and sell it today you would lose (1.00) from holding EDP Energias or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

The Siam Cement  vs.  EDP Energias

Siam Cement

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Siam Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Siam Cement is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

EDP Energias

Risk-Adjusted Performance

Very Weak

Over the last 90 days EDP Energias has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EDP - is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Siam Cement and EDP -

The main advantage of trading using opposite Siam Cement and EDP - positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siam Cement position performs unexpectedly, EDP - can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EDP - will offset losses from the drop in EDP -'s long position.

The idea behind The Siam Cement and EDP Energias pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.